Philip Green mounted an assault yesterday on the institutional shareholders he must win over to stand any chance of acquiring Marks & Spencer, accusing them of misleading him about the type of deal structure they wanted.

Philip Green mounted an assault yesterday on the institutional shareholders he must win over to stand any chance of acquiring Marks & Spencer, accusing them of misleading him about the type of deal structure they wanted.

His attack came as he predicted that it would take up to 10 years to restore M&S as the country's flagship retailer.

Separately, it emerged that the biggest investor in M&S had sold down part of its stake last week after the company's board rejected Mr Green's takeover proposal. Brandes Investment Partners, the US fund manager that could decide M&S's fate, sold more than £10m of stock on Friday in a move that raised question marks over its plans for its remaining 12.86 per cent stake. The San Diego-based group sold 500,000 American Depositary Receipts for $39.63 - some 2 per cent of its holding.

Traders said Brandes's sale could spook some investors that are holding stock in the hope that Mr Green will raise his bid. Traditional UK pension funds that take a long-term view, including Scottish Widows, Schroders and Barclays, have been raising their shareholders in M&S since Mr Green said he was planning to bid. Shares in M&S yesterday slipped 6.25p to 355.25p before recovering to close 0.5p higher at 362p.

Mr Green sounded out City institutions about whether they would prefer an all-cash or cash-and-shares bid before tabling an indicative proposal last Thursday that would have given shareholders 25 per cent of the bidding company on top of a 290p to 310p cash offer. M&S's board rejected the bid.

Yesterday Mr Green said the institutions had given him "a very clear indication they wanted some share in the upside" of M&S's fortunes should his takeover bid succeed. But investors have since criticised his offer of stub equity, insisting they do not want to be minority investors in a company controlled by Mr Green.

One top-ten investor said: "We don't particularly like being minority shareholders, particularly in a company when the majority shareholder doesn't want any institutional investors."

Mr Green, who was speaking at a business conference for entrepreneurs, said: "This is the reason why I don't know where I stand now. A week on, I am not really sure what these people [shareholders] want."

City institutions have been bruised by Mr Green's acquisitions of Sears, Bhs and Arcadia, deals that have helped to turn the Monaco-based entrepreneur into Britain's fourth-richest man on paper. Within one year of buying Arcadia - from Stuart Rose, who was installed as chief executive of M&S last week - Mr Green had managed to increase the Top Shop to Burton retailer's profits by 96 per cent.

Although Mr Green has said he intends to sound out the biggest shareholders in M&S to gauge their reaction to his proposal, yesterday he said he had yet to talk to any investors. When he or his advisers - Merrill Lynch and Goldman Sachs - do consult the institutions, they are expected to query Mr Rose's track record, highlighting that his recent success has been in selling retail businesses rather than running them.

"M&S is a wonderful brand. It has been poorly run. It has lost its way. I believe it's a business I can fix," Mr Green said. But he warned: "It will take five to 10 years of hard work to get this company back at the forefront of retailing."

Meanwhile, Mr Green's camp suffered an embarrassing blow after the Takeover Panel forced it to issue a statement denying a report that claimed he would abandon his plan to acquire M&S if the deal became the subject of a full competition inquiry. Revival Acquisitions, Mr Green's bid vehicle, said: "Contrary to recent press speculation, Revival has yet finally to determine whether, if it were to make an offer for Marks & Spencer Group and such offer were to be referred to the Competition Commission, it would still wish to pursue its interest in acquiring M&S or which, if any, undertakings it might be prepared to offer in order to secure clearance from the Office of Fair Trading or the Competition Commission."

Observers said the statement was aimed at ensuring Mr Green's options remained flexible. Should he drop his plans to bid, under Panel rules he would be barred from stalking M&S for 12 months.

Although any merger would fall under the OFT's microscope, competition lawyers do not believe that the watchdog would block a deal. Combining Mr Green's three clothing empires would give him control of about 20 per cent of the UK clothing market. It would have a 26 per cent share of the womenswear market and up to 40 per cent of the tightly defined middle market in ladies' wear.

Yesterday Mr Green said: "We do not believe there is a competition issue. We've done our homework." He declined to comment on Brandes's decision to sell down its stake, although he will need to persuade the US fund manager to back him if he returns with a higher offer.

Brandes has remained tight-lipped about its plans for its stake, although it does describe itself as a "value investor" that takes stakes in companies it believes trade at a discount to their intrinsic value. It started to build up a stake in M&S in December 1999 shortly after the retailer ran into difficulties. It sold its holding down during the group's recovery in 2002, banking a profit. It reverted to buying shares at the end of last year, becoming M&S's largest shareholder in March when it acquired an 11.1 per cent stake.